NSW feed-in tariff reviewed

25th Nov 2011

The tariff paid for solar electricity to those in New South Wales could be halved, upon recommendations from the state's pricing regulator.

The Independent Pricing and Regulatory Tribunal (IPART) has called for a tariff of between 8 and ten cents per kilowatt house be paid to households who feed the excess power generated by their rooftop solar panels back into the grid.

The already revised price - reduced from 60 cents to 20 cents when the government's bonus scheme finished in 2010 - should be halved again in order to avoid penalising households without the panels, according to IPART.

The tribunal released a draft report on a "fair and reasonable feed-in tariff", claiming that the generous payments made available to customers who installed solar units are ultimately funded by all electricity consumers.

"This [recommended tariff] means the average customer will not be paying higher prices to subsidise households with solar panels,'' IPART acting chairman and chief executive Jim Cox said in a statement yesterday.

Mr Cox stated that while proposals made by the solar industry were carefully considered, IPART supports its decision to recommend a feed-in tariff less than the retail price.

"While retailers are able to supply electricity generated by solar PV units to other customers, they incur costs in doing so - namely charges for transportation across the networks and costs associated with meeting green scheme obligations," he said.

"Setting a higher feed-in tariff than 8 to 10 c/kWh for 2011/12 would involve a subsidy, incurring costs that need to be recovered from higher electricity prices or the NSW budget."

The tribunal also recommended that the state government should not mandate the feed-in tariff, but rather publish a benchmark range which is determined by IPART and applies for the coming financial year.

Retailers would in turn be able to set their own feed-in tariffs, with the benchmark range allowing customers to understand the value of their energy and be encouraged to then so shop around for the best offers.

"Improving customer understanding and creating more effective retail competition is likely to enable solar PV customers to identify fair and reasonable feed-in tariff offers and empower them to seek out offers from retailers," Mr Cox stated.

"This will increase the competitive pressure on retailers, which should deliver fair and reasonable feed-in tariffs to customers."

The tribunal believes that appropriate measures should be taken to minimise further electricity price increases.